Sale of higher-end homes soar in Sonoma County

ROBERT DIGITALE

THE PRESS DEMOCRAT | April 15, 2014

Talk about a tale of two housing markets.

In the last five years, sales of entry-level homes have never gotten off to a slower start in Sonoma County, while transactions for move-up and luxury properties have never been so strong at this time of year.

The jump in higher-end sales helped push the county's median sales price in March to $498,000, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws.

The median price has increased 56 percent in the last two years and now stands at its highest point for the month of March since 2007.

Buyers last month purchased 353 single-family homes, a decline of 12 percent from March 2013. For the first three months of the year, sales have decreased 9 percent from last year and totaled the lowest number since 2008.

But when sales are broken down by price segments, divergent trends emerge.

In the first quarter of 2009, seven in 10 single-family homes sold for less than $400,000. But so far this year, nearly seven in 10 sold at or above $400,000.

"Now it's just flip-flopped," said Gerrett Snedaker, a senior vice president in Sonoma for Wine Country Group by Better Homes and Gardens Real Estate.

And some price segments are seeing significant jumps in activity. First-quarter sales grew 64 percent from a year earlier for homes priced between $600,000 and $1 million. And they soared nearly 80 percent for houses priced above $1 million.

In early 2009, the county's housing market was dominated by foreclosures and short sales, most of which were starter homes. At that time, buyers appeared lukewarm toward purchases in the move-up and luxury markets.

In February of that year, the median price fell to $305,000, the bottom of a historic crash in the housing market. Owners watched their home equity drop as the median price slid from a record high of $619,000 set in August 2005.

Over the past five years, foreclosures and short sales slowly declined and by last month comprised just one in 10 sales in the county. A short sale refers to a property that is sold for less than the amount owed on the mortgage.

To date this year, buyers have purchased 281 homes for less than $400,000 and 609 houses priced at or above that amount. That is respectively the worst and best sales results in the past five years.

Real estate brokers said the pace of sales in the different price segments has been noticeable.

"It seems like the bottom of the market has kind of gone stale," said Belinda Andrews, a broker associate for Century 21 in Santa Rosa. Meanwhile, she said, buyers were snapping up properties priced at or above $700,000.

The increasing sales is due partly to pent-up demand and partly to the large number of potential buyers from within and outside the county, brokers said.

"There's plenty of people that have the wherewithal," Laws said.

The drop in distressed properties has resulted in a lack of inventory that continues to limit sales, brokers said. March ended with less than a two-month supply of available homes at the current pace of sales.

The lack of inventory is keeping some homeowners from listing their own properties for sale, brokers said. The owners feel confident that they can find buyers for their houses, but they fear they might not be able to purchase another place to live.

Not all the jump in the median price is due to the shift toward upper-end properties, Laws said. Some of the increase also has come through price appreciation.

Corelogic's Home Price Index offered support for that view. The index reported that prices for the county's non-distressed properties had increased 20 percent in February from a year earlier.

One change in the market is that more buyers now are canceling transactions when issues arise, Snedaker said.

When buyers were snapping up economically distressed homes, they readily agreed to buy the discounted properties "as is," he said. But those spending $900,000 on a home aren't as willing to make thousands of dollars in unforeseen repairs without some concessions from the seller.